In an airdrop, however, the issuer does not assign any tasks to the recipients they need only meet some effortless requirements. Airdrops and bounties are similar in that both involve issuing seemingly free tokens. During a bounty program, an issuer provides compensation for designated tasks such as marketing and making improvements to aspects of the cryptocurrency framework. Like airdrops, bounty progrms are a means of advertising and have become a useful part of many ICO campaigns. Bounty programs are essentially incentivized reward mechanisms offered by companies to individuals in exchange for performing certain tasks. The main goal of an airdrop is to promote the new cryptocurrency. Although courts and the Commission have traditionally held that the transfer of “free” shares of stock is a “sale” of securities where the issuer derives some benefit from the transfer, the Order is the first treatment of the issue in the context of cryptocurrency bounty programs.Īn airdrop involves a controlled and periodic release of “free” tokens to people that meet a specific set of requirements, such as user ranking or activity. The Securities and Exchange Commission just issued a cease and desist order (the “Order”) with respect to an initial coin offering, finding the issuance of “free” tokens through a related bounty program in exchange for online promotional services constituted an unregistered sale of securities and thus a violation of the registration provisions of the federal securities laws. If you’re thinking of airdropping free tokens or implementing a cryptocurrency bounty program, be careful.
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